"We expect business conditions to worsen in the coming quarters because of the continued upward trend of the Korean won amid a weaker-than-expected economic recovery in advanced nations," the company said.

The world's fifth-biggest auto maker, when combined with affiliate Kia Motors Corp., has been struggling to compete with rivals as the stronger won, particularly against a weaker yen, has made its exports more expensive. Earlier this year Hyundai set its annual sales growth target at just 4%, its most conservative in over a decade.

The won in 2013 reversed several years of protracted weakness and has been on a steady rise against major currencies. It gained more than 8% against the U.S. dollar in the second quarter from a year earlier, and recently traded at a six-year high.

"A strong won is a key drag for many Korean companies, including Hyundai. The headache isn't just the appreciation itself, but the speed of gains, that has been drastic," said Citi analyst Ethan Kim.

Hyundai said Thursday that its second-quarter net profit dropped to 2.35 trillion won ($2.3 billion) from 2.52 trillion won a year earlier.

Operating profit fell 13% from a year earlier to 2.09 trillion won, while revenue declined 1.9% to 22.75 trillion won.

Its bottom line was also hurt by costly incentives to lure customers from rivals and help lower inventories of older models, such as Sonata and Elantra. The cost of consumer incentives for U.S. buyers rose 43% on average in the second quarter, from a year earlier.

A key challenge for Hyundai this year will be whether it can regain ground in the U.S., its second-largest overseas market after China. Early this year, the company replaced its U.S. chief executive, following a slide in its U.S. market share and repeated vehicle recalls.

As part of efforts to rebuild its brand image and boost sales, Hyundai launched its second-generation premium Genesis sedan and its revamped its flagship midsize Sonata sedan in the first quarter.

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